Case Note & Summary
The Bombay High Court disposed of two writ petitions concerning assessment years 2010-11 and 2009-10, where the petitioner, M/s. CWT India Private Limited, challenged transfer pricing adjustments made by the Transfer Pricing Officer (TPO) under Section 92CA(3) of the Income-tax Act, 1961. The petitioner had filed its returns, which were processed under Section 143(1), and later selected for scrutiny. The Assessing Officer referred the matter to the TPO due to international transactions. The TPO passed an order making upward adjustments without providing sufficient opportunity of hearing to the petitioner. The court, after hearing both sides, found that the TPO's order violated principles of natural justice. The court set aside the TPO's order and remanded the matter back to the TPO for fresh consideration, directing that the petitioner be given a proper opportunity of being heard. The petitions were allowed with no order as to costs.
Headnote
A) Income Tax - Transfer Pricing - Section 92CA(3) - Natural Justice - The TPO passed an order making upward adjustment without giving adequate opportunity of hearing to the assessee, violating principles of natural justice - Held that the order was unsustainable and set aside (Paras 1-2).
Issue of Consideration
Whether the Transfer Pricing Officer's order under Section 92CA(3) of the Income-tax Act, 1961, making upward adjustment, was valid when passed without affording proper opportunity of hearing to the assessee.
Final Decision
Both writ petitions are allowed. The impugned orders of the TPO are set aside. The matters are remanded back to the TPO for fresh consideration, with a direction to provide proper opportunity of hearing to the petitioner. Rule made absolute. No order as to costs.
Law Points
- Transfer Pricing
- Natural Justice
- Opportunity of Hearing
- Section 92CA
- Income Tax Act
- 1961
Case Details
2023 LawText (BOM) (09) 105
Writ Petition No. 1784 of 2022 with Writ Petition No. 1791 of 2022
K. R. Shriram, Dr. N. K. Gokhale
Mr. Vishal Kalra a/w Ms. Rajnandini Shukla i/b Mr. Harsh Rajesh Shah for Petitioner, Mr. Suresh Kumar for Respondent
M/s. CWT India Private Limited
Assistant Commissioner of Income Tax Circle-1(2)(1)
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petitions challenging transfer pricing adjustments made by the Transfer Pricing Officer under Section 92CA(3) of the Income-tax Act, 1961.
Remedy Sought
Petitioner sought quashing of the TPO's order and direction for fresh consideration with proper opportunity of hearing.
Filing Reason
Petitioner aggrieved by the TPO's order passed without adequate opportunity of hearing.
Issues
Whether the TPO's order under Section 92CA(3) was passed in violation of principles of natural justice.
Submissions/Arguments
Petitioner argued that the TPO did not provide sufficient opportunity of hearing before making upward adjustment.
Respondent argued that the order was valid and passed after due consideration.
Ratio Decidendi
An order passed under Section 92CA(3) of the Income-tax Act, 1961, without affording adequate opportunity of hearing to the assessee, violates principles of natural justice and is liable to be set aside.
Judgment Excerpts
The facts are identical and therefore, we decided to dispose both the matters together by this common order.
With the consent of the Parties, the Petitions are taken up for hearing at this stage itself.
Procedural History
Petitioner filed returns for AY 2010-11 and 2009-10, processed under Section 143(1). Cases selected for scrutiny, reference made to TPO under Section 92CA(2). TPO passed order under Section 92CA(3) making upward adjustment. Petitioner challenged the order by filing writ petitions.
Acts & Sections
- Income-tax Act, 1961: 143(1), 92CA(2), 92CA(3)
